A GUIDE TO BUYING PROPERTY IN SWITZERLAND
Switzerland is probably the most stable economy in the world. It boasts a healthy climate, efficient railways, low crime, great schools, tax incentives, and a fantastic lifestyle potential. In a recent survey it was voted 2nd best place to live in the world.
So… You're interested in a buying a property in Switzerland. But where do you start? You may have several questions in mind about how to get started.
1. Where can foreigners buy property in Switzerland?
2. Where is it difficult to buy a property in Switzerland, and where can you not buy a Swiss property?
3. What restrictions are there?
4. What is the purchase procedure?
5. What costs will be involved?
There has been a change in Swiss law that has opened the door to foreigners wishing to buy property in Switzerland. This only applies in some Cantons, and it means a certain quota of authorisations is allocated for foreign buyers in given areas.
If you are serious about buying a Swiss property look to the nominated tourist areas, foreigners usually can buy a Swiss property in these localities. For example the Valais region is a prime tourist zone, considered to have the best climate in Switzerland, along with the highest mountains. Potential foreign buyers will find it relatively easy to buy and invest there.
AREAS WHERE YOU CAN BUY PROPERTY RELATIVELY EASILY AS A NON-SWISS RESIDENT
AREAS WHERE IT IS FAIRLY DIFFICULT TO BUY AS A NON-SWISS RESIDENT
AREAS WHERE IT IS NEARLY IMPOSSIBLE TO BUY AS FOREIGN BUYER
1. SO, I AM NOT A SWISS NATIONAL, CAN I BUY PROPERTY IN SWITZERLAND AS A FOREIGNER?
First of all, yes, it is possible for a non-resident person to purchase a property in Switzerland.
In order to be able to reside in Switzerland beyond a continuous 90-day period, a non-Swiss citizen is required to obtain a residence permit.
There are different types of permits available, depending on what the individual’s requirements are.
Typically, the majority of persons from abroad will apply for a renewable B permit that allows them to live in Switzerland and if they wish to, also work.
The advantage is that a B permit holder will be allowed to purchase any piece of property without having to apply for a separate permit. EU persons are also allowed to purchase in addition to their domicile home additional homes that would not be used as primary domicile but e.g. as vacation homes, e.g. an apartment in Ticino for the summer and a chalet in Valais for the winter vacation.
The acquisition of real estate by non-residents is regulated by Swiss Federal Law under the Lex Koller regulations. The Lex Koller requires "persons abroad" to obtain a permit from the appropriate cantonal and federal authorities before buying real estate in Switzerland.
In certain areas of the Cantons of Vaud, Valais, Fribourg, Bern, Neuchâtel, Ticino and Graubünden it is possible to buy property through the Lex Koller legal process. The number of properties available to foreign (non-resident) buyers is limited by the Swiss Government. Currently the total annual number of properties that can be bought by foreigners in Switzerland is set at 1,440. This is divided for the Cantons as foreigner 'permits'. These quotas are subject to change.
If the property you're interested in has already been part of a foreigner quota (ie. has been owned by a non-resident person and granted a 'permit') this is transferred to the new owner and does not need to be waiting for fresh allocation of the quota.
The main tourist areas and ski resorts enjoy the majority of the permits allocated, making it fairly straightforward to buy in the Cantos of Vaud, Valais and the Bernese Oberland, as well as some areas of Ticino.
If the property is used as a main residence, no 'foreigner' permit is required provided that the purchaser actually lives there (renting out is not allowed). This is commonly known as the 'Permit B' and involves acquiring Swiss Residency at the time of the property purchase. A good Swiss notary or 'fiduciaire' can help with the application process.
GOOD RENTAL AREAS: THE VALAIS AND VAUD
The ski resorts of Valais and Vaud are also great rental zones and will thus ensure a faster property appreciation than some other areas.
Another major benefit about buying a Swiss property in the Valais region is the zero inheritance tax. This does not apply to all other cantons, so ask before you buy.
PLUS! Mortgage rates can start at 2.5 % or even lower, and the notary fees are low in the canton of Valais.
2. WHERE CAN I NOT BUY A SWISS PROPERTY? WHERE IS IT DIFFICULT TO BUY BECAUSE OF LIMITATIONS?
Avoid rural areas, non-tourist zones, and certain Cantons. Have a look at the rough map on this page, it'll give you an idea of restricted zones and areas with restrictions. You'd be surprised to know that a well-known tourist spot, like Zermatt, have decided not to let foreigners buy. Many more areas either have a total ban or strict restrictions for foreign buyers.
The Lex Friedrich law sets the guidelines for foreigners buying properties in Switzerland so as to avoid any speculation with regards to real estate. This way the Swiss market remains stable and offers a safe investment.
There are exceptions, for instance:
In certain Swiss Cantons, foreigners can invest money into buildings with a moderate rent. Such as new-build, or multi-apartment blocks, which are rented out for low rent, less than the market value. This makes you exempt from local taxes for a period of up to 20 years. After this the rent can be raised.
3. WHAT RESTRICTIONS ARE THERE?
When considering purchase of Swiss property it is good to keep in mind certain regulations and restrictions.
a. Foreigners who actively seek to buy a Swiss property should understand that they can as a non-Swiss family only buy one property. The size of the property can be of up to 200 square metres in living area. For chalets the plot area is limited to 1000 sqm. When the child of the non-Swiss family reaches the age of 20, he/she can purchase one property in their own name, having proved their financial independence.
b. Certain Cantons restrict the time within which the property can be resold. The limits vary from Canton to Canton - for example it is not unusual for a buyer to have a restriction of resale within the first five years of ownership. After the time has elapsed it is possible to resell the property, either to a foreign or a Swiss buyer. The rules may have exceptions that after certain criteria are met, the resale would be possible at an earlier stage.
c. An owner can occupy their property for up to six months per year, with three months maximum per stay.
d. A property can be rented out for a maximum of 11 months and one week per year.
An EU citizen with a Swiss residency permit type B, and anyone with residence permit type C, will have virtually no limitations for buying a property in Switzerland. We suggest you talk to your local notary who will help you to apply for permits.
4. WHAT IS THE PURCHASE PROCEDURE?
A local Swiss Public Notary will act for both the purchaser and vendor to complete the transaction. He is there to protect the interests of both parties and he will draw up the deeds and documents required for legal ownership.
Once the purchaser has chosen a property, be it a villa, a castle, land, an apartment or a chalet, the purchasing procedure is straightforward through the Notary
a. Complete personal details forms and Power of Attorney documentation.
b. Payment of the agreed deposit to the Notary’s account.
c. Signing of the deed of sale.
The purchase of an apartment becomes valid once the owner is registered at the Land Register.
All contracts are carried out in Swiss Francs.
If the property is being bought by a non-Swiss resident the Notary will apply on their behalf to the Cantonal authorities for an authorisation permit. The time taken to receive authorisation varies from commune to commune and depends on the current status of permit allowances and allocations in each particular area.
Once the authorisation has been received and the property purchase completed, the notary will record the deed of sale with the Land Register.
5. WHAT COSTS WILL BE INVOLVED?
The buyer is responsible for the notary fees, land registry fees and Government purchase taxes, which vary from Canton to Canton. For example, in Valais these will amount to 2.5% of the total property purchase, whereas in Vaud that figure is 5% and in Bern 3%.
Owners of second homes in Switzerland are liable to annual taxes, which amount to about 1,3 % of the purchase price p.a.This figure consists of several small taxes including land tax, tourist tax and wealth taxes. Also included is a tax on estimated rental income from the property regardless of whether or not the property is actually rented out during the year.
Taxes are paid to three bodies:
The Swiss Government (Federal tax)
The Canton (Cantonal tax)
The Commune (Communal tax)
With apartments and property with shared areas/facilities the following also apply:
2. Co-ownership charges: (about 0.8 % of purchase price p.a.)
Each purchaser acquires a share in the Propriete Par Etage (PPE), which means co-ownership by floor. The total annual costs of an apartment building are shared between the apartment owners, proportioned according to the size of each apartment. It is commonly estimated that the annual running costs of a building are about 0.8 % of the purchase price.
These costs are divided up proportionately between the owners, according to the size of their apartment.
These expenses include:
a. caretaker / social security contributions
The manager (of the co-owned property) collects the relevant amounts covering the total expenses incurred by the building. These are payable quarterly or half-yearly.
b. maintenance of building and materials
c. water / gas / electricity and heating
d. insurance and various taxes
e. gardening and maintenance of roads
f. administration fees and various expenses
g. an allocation to the building's renovation fund
Another thing to watch out for is that every Canton has its own rules, so if you do plan on buying you'd need to find a local Notary. We can help!
We can help you with finding an English-speaking Notary, which bank to use, arrange viewing trips, travel, and accommodation.
If you would like more information, please contact us and we'll point you to the right direction.